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Abstract With the dynamic changes in the business environment of enterprises, it is more urgent for companies to carry out business innovation to enhance their competitive advantages. This paper analysis on the retailers′ competitive advantage under dynamic ability in business innovation empirically, taking retailers of Shaanxi province for example, and obtained the following conclusions: first, the retail′s business innovation is divided into format portfolio and format integration, any of those has a significant positive effect on the retail competitive advantage, and the effect of format integration stronger than the format portfolio, in terms of path coefficients or from a significant degree of view. Second, retailers′ dynamic capabilities can be divided into opportunity recognition capabilities, the ability to integrate reconstruction, service flexibility and organizational flexibility capability, and dynamic ability has a significant positive regulatory role on business innovation and retailers′ competitive advantage overall. Third, the ability of identify opportunities has a more prominent role on format portfolio and retailers′ competitive advantage, the ability of integrate and reconstruction has a more prominent role on formats integrate and retailers′ competitive advantage, and the ability of service flexibility and organizational flexibility have a significantly positive regulation on business innovation and retailers′ competitive advantage. Accordingly, this paper provides some suggestions for retailers.
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